Better to be Gavin Patterson at BT and ‘show leadership’ by volunteering for a pay cut, rather than Ross McEwan at Royal Bank of Scotland, who was required to take the pain for the team because of abysmal performance which is no fault of his own.

The last year was awful for BT with the discovery of the £531m black hole in its Italian operation, forced separation of Openreach, refunds to customers for faulty line installations and noisy criticism for burning £1.2bn of shareholders’ money on Champions League football.

It is testimony to BT’s prowess as a cash machine that, after the mis-steps, profits before tax came in at £2.4bn and free cash flow stood at £2.8bn.

BT chief exec Gavin Patterson

Patterson has parked the proverbial bus, taking defensive steps before the arrival of new chairman Jan du Plessis in November.

Long-troubled Global Services is being pared back to serve multinational companies and will no longer provide in-country telecoms. Some 4,000 jobs are being axed and the progressive dividend abandoned for something aligned to performance.

Share this article

By accepting dramatically reduced pay of £1.3m (down from £5.3m in 2015) Patterson is taking personal punishment. That is a big hit and will save theatrics at the upcoming annual general meeting.

Patterson also finally seems to accept that BT’s past preferred technology, the overlay of fibre on copper lines, is not what post-Brexit Britain needs.

Openreach is launching a consultation with the aim of winning approval for providing 2m customers with fibre to the premises by 2020 and 10m by 2025. All far too slow given the UK’s high-tech ambitions.

Openreach is launching a consultation with the aim of winning approval

Patterson is smart enough to recognise that, after a year when BT shares came down with a huge bump, the challenges in 2017 will be delivery and service.

Any past thoughts of putting in a bid for ITV look like toast. That, on the day that John Malone’s Liberty Global, owner of Virgin Media, poured cold water over an offer for ITV.

But if the shares of the broadcaster sans chief executive Adam Crozier continue to fall at the current pace, then opportunity could still knock.

Wages of hope

Between Brexit and the general election Mark Carney had a difficult furrow to plough in the May inflation report.

The governor was in the political crosshairs during the referendum campaign when the Bank of England’s bleak forecasts were seen by Brexiteers as betrayal.

Happily, the projections turned out to be to be wrong, though the Bank played a critical role in keeping the economy afloat with its special funding for the banks, a cut in bank rate and extra money printing.

The Bank’s latest forecasts are based on the concept of an orderly Brexit with a decent trade deal. Presumably, if Britain were to fall over a cliff-edge Carney would be there with some kind of safety net.

Bank of England’s bleak forecasts were seen by Brexiteers as betrayal.

What is most intriguing about the projections is the idea that the squeeze on household earnings will be temporary and there are good reasons to believe that real earnings will pick up.

Among the reasons for this belief is the recognition that the economy is at or near full employment and that will lead to firms putting wages up.

There is also the belief at the Bank that once the Brexit talks are in full swing and the possibility of a sensible deal emerges employers will be less cautious about offering more generous pay settlements.

Finally, the impact of imported inflation will wear off fairly quickly and could be assisted by lower oil prices.

Carney, at present, looks to be in the cup- is-half-full camp. Growth for this year has been shaved marginally. An interest rate rise presently looks off the table until the end of 2018 at least. Happy days.

Fake auditing

The implosion at social housing concern Connaught was chronicled in some detail on these pages.

Five years on, we learn how useless auditor PwC was in detecting faulty accounting, including the use of a covert loan from a director to temporarily boost cash flow.

The £5m fine levied on PwC is a bit late for damaged investors and residents who suffered when Connaught went down.

Good reason for accounting watchdog the Financial Reporting Council to speed up its investigations so they are completed within two years.

Do you want to automatically post your MailOnline comments to your Facebook Timeline?

Your comment will be posted to MailOnline as usual

We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook.

You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.